Preparing Tax Invoices Under the GST System

Preparing Tax Invoices Under the GST System

Invoices have always been an important part of business operations. However, as the GST regime is going to be implemented from July 1, the government has laid down new rules and formats for issuing GST-compliant invoices.

By following the correct procedure for the GST invoices, a taxpayer will be able to claim Input Tax Credits, which is one of the biggest reforms in the regime.

Under the GST system there can be two types of invoices, which are:

  1. Tax Invoices

Every businessperson who is registered under GST as a standard taxpayer is required to issue tax invoices for their supply of goods and/or services.

The following is a sample invoice format for the GST tax invoices:

The typical entries that have to be filled in a GST tax invoice are:

  • Your name, address, and the GSTIN number.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018, you can use 2017NameOfCompany.
  • Issuing date.
  • The total value of the goods and services.
  • The rate of tax levied (CGST, SGST, or IGST).
  • Place of supply and state name, in case supplied to someone in another state.
  • Description of the goods and services.

Every invoice for the supply of goods has to be issued when:

  • The goods are removed from your place (if the goods are supplied to some other place)
  • The goods are given to the buyer (if the goods are sold at the same place)

Every invoice for the supply of services has to be issued when:

  • Within 30 days from the date, you have supplied the service.
  • Within 45 days from the date, you have supplied the service (if you are a bank or NBFC).

Copies of Invoices

If you are supplying goods then you will have to make two copies of the original invoice:

  • Duplicate- for the transporter of your goods.
  • Triplicate- for yourself.

Of course, the original invoice will be issued to the buyer/recipient. If you are supplying services then you will have to make only one copy for yourself, and the original one will be issued to the buyer/recipient.

  1. Bill of Supply

If you are not liable for GST registration but have opted for the GST composition scheme, then you have to issue a bill of supply instead of a tax invoice. The same is also to be issued when you are supplying exempted goods and/or services. The typical entries that have to be filled in a GST bill of supply are:

  • Your name, address, and the GSTIN number.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018 you can use 2017NameOfCompany.
  • Issuing date.
  • The total value of the goods and services.
  • Accounting code (in the case of services) or HSN code (in the case of goods).
  • Place of supply and state name, in case supplied to someone in another state.
  • Description of the goods and services.

How to Fix Mistakes in Issued Invoices?

You are allowed to rectify errors in the invoices issued by you through credit and debit notes. You can provide the tax and value details of the concerned goods and/or services through these notes which are already given in GSTR-1 and GSTR-2.

While a debit note has to be issued when a short tax is charged (smaller than the applicable tax), a credit note is issued when an excess tax is charged.

Understanding the new invoice formats and regulations is important for every business to become GST-ready. If you haven’t learned about these yet, then it’s best to familiarize yourself as soon as possible.

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